Gas and Electricity Year Ahead Wholesale costs are lower than those in last week’s report and are significantly lower than most of 2021 / 2022 / 2023, although higher than 2020. Oil is also lower at $67 a barrel.
The recent threats by the US to apply greater sanctions against Russia and to apply higher tariffs to those that buy energy from them, seems to have renewed the optimism that a ceasefire with Ukraine may be possible. A meeting between Presidents Trump and Putin will take place on the 15th of August. The energy markets have seen this as an opportunity to avoid future supply issues, tariffs and sanctions, and prices moved lower. The US has warned India that buying Oil from Russia will result in 50% tariffs from the 27th of August. Any reduction of Russian Oil and Gas exports will have an impact on both of their economies.
EU Gas Storage remains very low at 72% full compared to 87% last year. With less Russian Gas being piped into Europe this year due to the closure of the route through Ukraine, LNG shipments are an important source of supply. Although China is buying more Gas from Russia, Asia remains a large buyer of LNG and competes with the European market, which has the potential to increase costs.
The contribution of Wind for generation increased over the last week to 28% of supplies, from 21%. This reduced the need for Gas at 20%, and Electricity via the Interconnectors at 19%. With high temperatures both here and on the continent, demand will likely increase for air cooling.
We would encourage those with energy contracts ending in the next few months and potentially further out, to engage with Indigo Swan and monitor positions closely.
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